EXECUTION COPY
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LOAN AGREEMENT
by and among
CTC COMMUNICATIONS CORP.,
as Borrower,
TORONTO DOMINION (TEXAS), INC.,
as Lender,
TORONTO DOMINION (TEXAS), INC.,
as Agent
and
TD SECURITIES (USA) INC.,
as Arrangement, Structuring & Syndication Agent
Dated as of March 15, 1999
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TABLE OF CONTENTS
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Page No.
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1. DEFINITIONS AND CONSTRUCTION.......................................... 1
1.1. Definitions...................................................... 1
1.2. Accounting Terms................................................. 18
1.3. Construction..................................................... 19
1.4. Schedules and Exhibits........................................... 19
2. LOAN AND TERMS OF PAYMENT............................................. 19
2.1. Advances......................................................... 19
2.2. Requirements of Law.............................................. 19
2.3. Borrowing Procedures and Settlements............................. 21
2.4. Payments......................................................... 22
2.5. Unavailability of the Eurodollar Rate............................ 23
2.6. Interest: Rates, Payments, and Calculations..................... 24
2.7. Telephonic Instructions.......................................... 24
2.8. Maintenance of Loan Account; Statements of Obligations........... 25
2.9. Certain Fees..................................................... 25
2.10. Mandatory Prepayment............................................ 25
2.11. Optional Prepayment............................................. 25
2.12. Breakage Costs; Indemnity....................................... 26
2.13. Effect of Notice of Prepayment.................................. 26
2.14. Subordination................................................... 26
3. CONDITIONS; TERM OF AGREEMENT......................................... 26
3.1. Conditions Precedent to the Initial Advance ..................... 26
3.2. Conditions Precedent to all Advances............................. 28
3.3. Condition Subsequent............................................. 29
3.4. Term............................................................. 29
3.5. Effect of Termination............................................ 29
3.6. Early Termination by Borrower.................................... 30
4. REPRESENTATIONS AND WARRANTIES........................................ 30
4.1. Due Organization and Qualification; Subsidiaries................. 30
4.2. Due Authorization; No Conflict................................... 31
4.3. Litigation....................................................... 32
4.4. No Material Adverse Change....................................... 32
4.5. Fraudulent Transfer.............................................. 32
4.6. Employee Benefits................................................ 32
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4.7. Environmental Condition.......................................... 33
4.8. Brokerage Fees................................................... 33
4.9. Year 2000 Compliance............................................. 33
4.10. Intellectual Property........................................... 33
4.11. Leases.......................................................... 34
4.12. Existing Indebtedness........................................... 34
5. AFFIRMATIVE COVENANTS................................................. 34
5.1. Accounting System................................................ 34
5.2. Financial Statements, Reports, Certificates...................... 34
5.3. Tax Returns...................................................... 36
5.4. Guarantor Reports................................................ 36
5.5. Certain Information in Connection With Acquisitions.............. 36
5.6. Taxes............................................................ 36
5.7. Insurance........................................................ 36
5.8. No Setoffs or Counterclaims...................................... 37
5.9. Compliance with Laws............................................. 37
5.10. Employee Benefits............................................... 37
5.11. Leases.......................................................... 38
5.12. Brokerage Commissions........................................... 38
5.13. Year 2000 Compliance............................................ 38
5.14. Projections..................................................... 38
5.15. Corporate Existence, etc........................................ 38
5.16. Disclosure Updates.............................................. 38
5.17. Use of Proceeds................................................. 39
6. NEGATIVE COVENANTS.................................................... 39
6.1. Indebtedness..................................................... 39
6.2. Liens............................................................ 40
6.3. Restrictions on Fundamental Changes.............................. 41
6.4. Disposal of Assets............................................... 41
6.5. Amendments to Credit Facility.................................... 41
6.6. Guarantee........................................................ 41
6.7. Nature of Business............................................... 41
6.8. [Reserved.] ..................................................... 41
6.9. Margin Stock..................................................... 41
6.10. Distributions................................................... 42
6.11. Accounting Methods.............................................. 42
6.12. Investments..................................................... 42
6.13. Transactions with Affiliates.................................... 43
6.14. Suspension...................................................... 43
6.15. No Prohibited Transactions Under ERISA.......................... 43
6.16. Violation of Material Agreements................................ 44
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7. EVENTS OF DEFAULT..................................................... 44
8. THE LENDER GROUP'S RIGHTS AND REMEDIES................................ 46
8.1. Rights and Remedies.............................................. 46
8.2. Remedies Cumulative.............................................. 46
9. TAXES AND EXPENSES.................................................... 46
10. WAIVERS; INDEMNIFICATION............................................. 47
10.1. Demand; Protest; etc............................................ 47
10.2. Indemnification................................................. 47
11. NOTICES.............................................................. 48
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER........................... 49
13. DESTRUCTION OF BORROWER'S DOCUMENTS.................................. 50
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS........................... 50
14.1. Assignments and Participations.................................. 50
14.2. Successors...................................................... 53
15. AMENDMENTS; WAIVERS.................................................. 53
15.1. Amendments and Waivers.......................................... 53
15.2. No Waivers; Cumulative Remedies................................. 54
16. AGENT; THE LENDER GROUP.............................................. 54
16.1. Appointment and Authorization of Agent.......................... 54
16.2. Delegation of Duties............................................ 55
16.3. Liability of Agent.............................................. 55
16.4. Reliance by Agent............................................... 56
16.5. Notice of Default or Event of Default........................... 56
16.6. Credit Decision................................................. 57
16.7. Costs and Expenses; Indemnification............................. 57
16.8. Agent in Individual Capacity.................................... 58
16.9. Successor Agent................................................. 58
16.10. Withholding Tax................................................ 58
16.11. Restrictions on Actions by Lenders; Sharing of Payments........ 60
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16.12. Payments by Agent to the Lenders............................... 60
16.13. Several Obligations; No Liability.............................. 60
17. GENERAL PROVISIONS................................................... 61
17.1. Effectiveness................................................... 61
17.2. Section Headings................................................ 61
17.3. Interpretation.................................................. 61
17.4. Severability of Provisions...................................... 61
17.5. Amendments in Writing........................................... 61
17.6. Counterparts; Telefacsimile Execution........................... 61
17.7. Revival and Reinstatement of Obligations........................ 62
17.8. Integration..................................................... 62
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is entered into as of March 15,
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1999, by and among the financial institutions listed on the signature pages
hereof (such financial institutions, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
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collectively as the "Lenders"), TD SECURITIES (USA) INC., a Delaware corporation
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("TDSI"), as an agent for the lenders (in such capacity, "Arrangement,
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Structuring & Syndication Agent"), with a place of business located at 31 West
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52nd Street, New York, New York 10019-6101, TORONTO DOMINION (TEXAS), INC., a
Delaware corporation with a place of business located at 909 Fannin Street,
Houston, Texas 77010, as administrative agent for the Lenders (in such capacity,
"Agent"), and CTC COMMUNICATIONS CORP., a Massachusetts corporation
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("Borrower"), with its chief executive office located at 360 Second Avenue,
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Waltham, Massachusetts 02451.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
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1.1. Definitions.
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As used in this Agreement, the following terms shall have the
following definitions:
"Acquired Indebtedness" means, with respect to any specified Person,
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Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
or such Person acquired all or substantially all of the specified Person's
assets, but excluding Indebtedness which is extinguished, retired or repaid in
connection with such other Person merging with or into or becoming a Subsidiary
of such specified Person.
"Advances" has the meaning set forth in Section 2.1(a).
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"Affected Party" means any Lender, any Lender's Eurodollar Lending
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Office, any beneficial owner of any Lender, and their respective successors and
assigns.
"Affiliate" means, as applied to any Person, any other Person who,
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directly or indirectly, controls, is controlled by, or is under common control
with such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote 5% or more of the Stock
having ordinary voting power for the election of directors (or comparable
managers) or the direct or indirect power to direct the management and policies
of a Person.
"Agent" has the meaning set forth in the preamble to this Agreement.
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"Agent-Related Persons" means Agent and any successor agents together
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with their respective Affiliates, and the officers, directors, employees,
counsel, agents, and attorneys-in-fact of such Persons and their Affiliates.
"Aggregate Facility Usage" means, as of any date of determination, the
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sum of the aggregate principal amount of Advances outstanding.
"Agreement" has the meaning set forth in the preamble hereto.
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"Applicable Margin" means:
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(i) with respect to Advances that are Base Rate Advances, 600 basis
points at all times through and including the date that is 90 days
subsequent to the Closing Date, 650 basis points at all times after the
date that is 90 days subsequent to the Closing Date and prior to the date
that is 180 days subsequent to the Closing Date, 700 basis points at all
times after the date that is 180 days subsequent to the Closing Date and
prior to the date that is 270 days subsequent to the Closing Date, 750
basis points at all times after the date that is 270 days subsequent to the
Closing Date and prior to the date that is 360 days subsequent to the
Closing Date and increasing by an additional 100 basis points on the date
that is 360 days subsequent to the Closing Date and on the last day of each
90-day period thereafter until the Maturity Date for so long as any
Advances are outstanding, provided, however, the Applicable Margin will
increase by an additional 200 basis points on the Maturity Date, if the
Advances are not paid in full by the Maturity Date; and
(ii) with respect to Advances that are Eurodollar Rate Advances, 700
basis points at all times through and including the date that is 90 days
subsequent to the Closing Date, 750 basis points at all times after the
date that is 90 days subsequent to the Closing Date and prior to the date
that is 180 days subsequent to the Closing Date, 800 basis points at all
times after the date that is 180 days subsequent to the Closing Date and
prior to the date that is 270 days subsequent to the Closing Date, 850
basis points at all times after the date that is 270 days subsequent to the
Closing Date and prior to the date that is 360 days subsequent to the
Closing Date and increasing by an additional 100 basis points on the date
that is 360 days subsequent to the Closing Date and on the last day of each
90-day period thereafter until the Maturity Date for so long as any
Advances are outstanding, provided, however, the Applicable Margin will
increase by an additional 200 basis points on the Maturity Date, if the
Advances are not paid in full by the Maturity Date.
"Arrangement, Structuring & Syndication Agent" has the meaning set
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forth in the preamble to this Agreement.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance in the
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form of Exhibit A-1 attached hereto.
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"Authorized Person" means any officer or other employee of Borrower.
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"Average Life" means, as of any date, with respect to any debt
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security or Disqualified Stock, the quotient obtained by dividing (i) the sum of
the products of (x) the number of years from such date to the dates of each
scheduled principal payment or redemption payment (including any sinking fund or
mandatory redemption payment requirements) of such debt security or Disqualified
Stock multiplied in each case by (y) the amount of such principal or redemption
payment, by (ii) the sum of all such principal or redemption payments.
"Average Price" means the average over the 20 trading days ending on
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the day immediately preceding the date of determination of the last reported
sale price or, if no such sale takes place on any such day, the closing bid
price, in either case as reported for consolidated transactions on the principal
national securities exchange (including the Nasdaq National Market) on which
such security is listed or admitted for trading.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
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(S) 101 et seq.), as amended, and any successor statute.
"Base Rate" means, for any day, the higher of (i) the sum of the
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Federal Funds Rate for such day plus 50 basis points per annum and (ii) the
Prime Rate for such day. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Rate shall be effective on the effective date of
such change in the Prime Rate or Federal Funds Rate.
"Base Rate Advance" means an Advance at any time the interest rate
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thereon is computed with reference to the Base Rate.
"Bell Atlantic Agreements" means those certain agreements entered into
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between Borrower and Bell Atlantic with respect to the resale of
telecommunications services by Borrower.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3
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(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA
Affiliate has been an "employer" (as defined in Section 3 (5) of ERISA) within
the past six years.
"Board" means the Board of Governors of the Federal Reserve System of
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the United States or any successor.
"Borrower" has the meaning set forth in the preamble to this
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Agreement.
"Borrower's Books" means all of Borrower's books and records
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including: ledgers; records indicating, summarizing, or evidencing Borrower's
properties or assets or liabilities; all information relating to Borrower's
business operations or financial condition; and all computer programs, disk or
tape files, printouts, runs, or other computer prepared information.
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"Borrowing" means a borrowing hereunder consisting of Advances made on
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the same day by the Lenders (or Agent on behalf thereof) to Borrower.
"Business Day" means any day that is not a Saturday, Sunday or other
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day on which commercial banks in New York City are authorized or required to
remain closed; provided that, when used in connection with a Eurodollar Rate
Advance, the term "Business Day" shall also exclude any day on which banks are
not open for dealings in U.S. dollar deposits in the London interbank market.
"Capital Expenditures" means expenditures made or liabilities incurred
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for the acquisition of fixed assets or improvements, replacements,
substitutions, or additions thereto that are required to be accounted for as
capital expenditures under GAAP, including the total principal portion of
Capitalized Lease Obligations.
"Capital Markets Transaction" has the meaning specified in Section
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2.10.
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"Capitalized Lease Obligation" means any Indebtedness represented by
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obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Change of Control" shall be deemed to have occurred at such time as:
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(a) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Exchange Act), other than a Permitted Holder, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than the Threshold Percentage of the total voting power of all classes of
Stock then outstanding entitled to vote in the election of directors (1) of
Borrower prior to the consummation of the Holding Company Reorganization, or (2)
of New Holding Company from and after consummation of the Holding Company
Reorganization, (b) a majority of members of the board of directors of Borrower
shall not be Continuing Directors; (c) Borrower shall cease to own and control,
directly and of record, 100% of the issued and outstanding capital Stock of each
of the Subsidiaries of Borrower; or (d) from and after consummation of the
Holding Company Reorganization, (1) a majority of members of the board of
directors of New Holding Company shall not be Holding Company Continuing
Directors, or (2) New Holding Company shall cease to own and control, directly
and of record, 100% of the issued and outstanding capital Stock of Borrower.
"Cisco" means Cisco Systems, Inc. and/or Cisco Systems Capital
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Corporation.
"Cisco Facility" means that certain loan agreement dated as of October
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14, 1998, between Borrower and Cisco Systems Capital Corporation, as lender, as
such may be amended, renewed, extended, supplemented, refinanced and replaced or
refunded from time to time.
"Cisco Subordination Agreement" means that certain Subordination
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Agreement to be entered into by Borrower, Cisco and Agent (on behalf of the
Lender Group). By entering into the Cisco Subordination Agreement on behalf of
the Lender Group, Agent shall bind each member of the Lender Group to the terms
thereof.
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"Class A Contingent Warrants" means those certain warrants issued to
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the Lenders prior to the initial Advance to purchase a number of shares of
common stock of the Borrower equal to the ratio to which the Advances made by
the Lenders from the Closing Date to the six month anniversary of the Closing
Date hereto bears to $30,000,000 multiplied by the Contingent Warrant Amount, at
an exercise price equal to the lesser of 100% of the Average Price as of March
11, 1999 or the day preceding the six month anniversary of the Closing Date.
"Class B Contingent Warrants" means those certain warrants issued to
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the Lenders upon each Advance made to the Borrower after the six month
anniversary of the Closing Date to purchase a number of shares of common stock
of the Borrower equal to the ratio to which such Advance bears to $30,000,000
multiplied by the Contingent Warrant Amount, at an exercise price equal to the
lesser of 100% of the Average Price as of March 11, 1999 or the day preceding
the date of such Advance.
"Closing Date" means March 24, 1999.
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"Closing Date Business Plan" means the set of Projections of Borrower
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for the 3 year period following the Closing Date (on a year by year basis, and
on a quarter by quarter basis).
"Collections" means all cash, checks, notes, instruments, and other
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items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commitment" means, at any time with respect to a Lender, the
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principal amount set forth beside such Lender's name on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1, in each of the
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foregoing cases, as such Commitment may be reduced from time to time in
accordance with (i) the last sentence of Section 2.1(a) or (ii) the provisions
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of Section 14.1, and "Commitments" means, collectively, the aggregate amount of
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the commitments of all of the Lenders.
"Compliance Certificate" means a certificate substantially in the
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form of Exhibit C-2 and delivered by the chief accounting officer of Borrower to
Agent.
"Contingent Warrant Amount" means a number of shares of common stock
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of Borrower, par value $0.01 per share, equal to 4.0% of the outstanding equity
of Borrower, calculated using the treasury stock method as of the day preceding
the Closing Date using a fair market value of the common stock equal to the
Average Price as of March 11, 1999.
"Contingent Warrants" means collectively, the Class A Contingent
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Warrants and the Class B Contingent Warrants.
"Continuing Director" means, as of any date of determination, a member
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of the board of directors of Borrower who (a) was a member of the board of
directors of Borrower on the Closing Date, or (b) was nominated to be a member
of the board of directors of Borrower by
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a majority of the Continuing Directors then in office to fill a vacancy left by
the death, expiration of term, permanent disability, or resignation of a
Continuing Director.
"Credit Facility" means the Loan and Security Agreement, dated as of
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September 1, 1998, among Borrower and Goldman Sachs Credit Partners L.P.
("Goldman Sachs") and Fleet National Bank ("Fleet"), as Lenders, Fleet National
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Bank, as Agent and Goldman Sachs Credit Partners L.P., as Arrangement,
Structuring & Syndication Agent, providing for revolving credit borrowings and
letters of credit, including all related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as such may be amended, renewed, extended, supplemented, refinanced
and replaced or refunded from time to time.
"Currency Agreements" means, with respect to any person, any currency
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swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates.
"Default" means an event, condition, or default that, with the giving
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of notice, the passage of time, or both, would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or
------------------
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof or is exchangeable at the
option of the holder for Indebtedness at any time, in whole or in part, on or
prior to the Maturity Date; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require Borrower to repurchase such Capital Stock upon the occurrence of a
Change of Control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that Borrower may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless either (i) such
repurchase or redemption is a Permitted Distribution or (ii) this Agreement has
been terminated.
"Dollars" or "$" means United States dollars.
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"Effective Date" has the meaning set forth in Section 2.2(b).
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"Eligible Transferee" means: (a) a commercial bank organized under the
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laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country, and having total
assets in excess of $250,000,000; provided that such bank is acting through a
branch or agency located in the United States; (c) a finance company, insurance
company or other financial institution or fund that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and having total assets in
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excess of $250,000,000; (d) any Affiliate (other than individuals) of a pre-
existing Lender; (e) so long as no Event of Default has occurred and is
continuing, any other Person approved by Agent and Borrower; and (f) during the
continuation of an Event of Default, any other Person approved by Agent.
"Equity Interests" means Stock and all warrants, options or other
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rights to acquire Stock (but excluding any debt security that is convertible
into, or exchangeable for, Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
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U.S.C. (S) 1000 et seq., amendments thereto, successor statutes, and regulations
or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject to ERISA whose
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employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any party subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit
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Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Eurocurrency Liabilities" has the meaning assigned to that term in
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Regulation D of the Board, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
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office, if any, of such Lender specified from time to time as its "Eurodollar
Lending Office" in a written notice to Borrower.
"Eurodollar Rate" means the interest rate per annum calculated
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according to the following formula:
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Eurodollar = Interbank Offered Rate
Rate ---------------------------------------
1 Eurodollar Reserve Percentage
"Eurodollar Rate Advance" means an Advance at any time the interest
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rate thereon is computed with reference to the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day, that percentage
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(expressed as a decimal) which is in effect from time to time under Regulation D
or any successor regulation, as the maximum reserve requirement (including any
basic, supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Rate Advances is determined), whether or
not Agent or any Lender has any Eurocurrency liabilities subject to such
requirements, without benefits of credits or proration, exceptions or offsets
that may be available from time to time to Agent or any Lender. The Eurodollar
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 7.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and any successor statute thereto.
"Existing Indebtedness" means Indebtedness of Borrower and its
---------------------
Subsidiaries outstanding on the Closing Date, excluding Indebtedness arising
under the Credit Facility and the Cisco Facility.
"Fabbricatore" means Mr. Robert Fabbricatore.
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"Fabbricatore Related Parties" means Fabbricatore, the Family Members
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of Fabbricatore, Fabbricatore Family Trusts, and any wholly owned Subsidiary of
any combination of the foregoing.
"Fabbricatore Family Trusts" means trusts or other estate planning
--------------------------
vehicles established for the benefit of the Family Members of Fabbricatore.
"Fair Market Value" means, with respect to any asset or property, the
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sale value that could be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy, as determined in good faith by the
Board of Directors of Borrower or a Subsidiary, as applicable.
"Family Member" means, with respect to any individual, any other
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individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight
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Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Agent (in its individual capacity) on
such day on such transactions as determined by Agent.
"Fee Letter" means that certain Fee Letter, dated February 12, 1999,
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among Borrower, TDSI and TD Texas.
"Funding Date" means the date on which a Borrowing occurs.
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"GAAP" means generally accepted accounting principles as in effect
----
from time to time in the United States, consistently applied.
"Governing Documents" means, with respect to any person, the
-------------------
certificate or articles of incorporation, by-laws, or other organizational or
governing documents of such Person.
"Governmental Authority" shall mean any federal, state, local, or
----------------------
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or listed
-------------------
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Holding Company Continuing Director" means, as of any date of
-----------------------------------
determination, a member of the board of directors of New Holding Company who (a)
was a member of the board of directors of Borrower on the Closing Date and is
elected to the board of directors of New Holding Company, or (b) was nominated
to be a member of the board of directors of New Holding Company by a majority of
the Holding Company Continuing Directors then in office to fill a vacancy left
by the death, expiration of term, permanent disability, or resignation of a
Holding Company Continuing Director.
9
"Holding Company Guaranty" means a general continuing guaranty in form
------------------------
and substance satisfactory to Agent, to be executed and delivered by New Holding
Company to Agent at the time of the Holding Company Reorganization.
"Holding Company Reorganization" means the reorganization, on terms
------------------------------
reasonably satisfactory to the Required Lenders, of Borrower into a holding
company structure in which the New Holding Company owns 100% of the issued and
outstanding stock of Borrower.
"Indebtedness" means: (a) all obligations of Borrower for borrowed
------------
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of Borrower
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all Capitalized Lease Obligations, (d) all
obligations or liabilities of others secured by a Lien on any property or asset
of Borrower, irrespective of whether such obligation or liability is assumed,
and (e) any obligation of Borrower guaranteeing or intended to guarantee
(whether guaranteed, endorsed, co- made, discounted, or sold with recourse to
Borrower) any indebtedness, lease, dividend, letter of credit, or other
obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 10.2.
----------------------- ------------
"Indemnified Person" has the meaning set forth in Section 10.2.
------------------ ------------
"Insolvency Proceeding" means any proceeding commenced by or against
---------------------
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of
-----------------
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Interbank Offered Rate" means, for any Eurodollar Rate Advance for
----------------------
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered Rate" shall
mean, for any Eurodollar Rate Advance for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m. (London Time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"Interest Payment Date" means (i) the last day of each March, June,
---------------------
September and December after the Closing Date in the case of the Base Rate
Advances, (ii) the last day of
10
each Interest Period in the case of Eurodollar Rate Advances, (iii) the Maturity
Date, and (iv) the date of any prepayment of all or any portion of the principal
of the Advances.
"Interest Period" means, in respect of any Eurodollar Rate Advance,
---------------
(i) in the case of the first Interest Period (if any) applicable to the
Advances, the period commencing on and including the Closing Date and ending on
the numerically corresponding date in the 3rd month thereafter, and (ii) in the
case of each subsequent Interest Period, the period beginning on the last day of
the prior Interest Period and ending on the numerically corresponding date in
the 3rd month thereafter; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
until the next succeeding Business Day unless the next Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day. Notwithstanding the foregoing, no Interest Period
in respect of the Advances may extend beyond the Maturity Date and each Interest
Period that would otherwise commence before and end after the Maturity Date
shall end on the Maturity Date.
"Interest Rate Agreements" means, with respect to any Person, an
------------------------
obligation of such Person pursuant to any interest rate swap agreement, interest
rate cap, collar or floor agreement or other similar agreement or arrangement
designed to protect against or manage such Person's or any of its Subsidiaries'
exposure to fluctuations in interest rates.
"Inventory" means all present and future inventory in which Borrower
---------
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located.
"Investments" means, with respect to any Person, all investments by
-----------
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide accounts receivable arising
from the sale of goods or services in the ordinary course of business consistent
with past practice), purchases or other acquisitions for consideration of
Indebtedness, Stock, or other securities, and any other items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
---
regulations thereunder.
"Legal Requirements" means all applicable international, foreign,
------------------
federal, state, and local laws, judgments, decrees, orders, statutes,
ordinances, rules, regulations, or Permits.
"Lender" and "Lenders" have the respective meanings set forth in the
------ -------
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1 hereof.
------------
11
"Lender Group" means, individually and collectively, each of the
------------
individual Lenders, Agent, and Arrangement, Structuring & Syndication Agent.
"Lender Group Expenses" means all: costs or expenses (including
---------------------
taxes, and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by the Lender Group; fees or charges
paid or incurred by the Lender Group in connection with the Lender Group's
transactions with Borrower, including, fees or charges for photocopying,
couriers and messengers, telecommunication, costs and expenses incurred by Agent
in the disbursement of funds to Borrower (by wire transfer or otherwise);
charges paid or incurred by Agent resulting from the dishonor of checks; costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, costs and expenses paid or incurred
by Agent in examining Borrower's Books, costs and expenses of third party claims
or any other suit paid or incurred by the Lender Group in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Lender Group's relationship with Borrower (or any of its
Subsidiaries party to one or more Loan Documents); and the Lender Group's
reasonable attorneys fees and expenses (including the reasonable fees of Latham
& Watkins, counsel to the Lender Group, which, as to such fees in respect of the
preparation, execution and delivery of the Loan Documents as in effect on the
Closing Date, shall not exceed $150,000, plus reimbursement of the reasonable
out-of-pocket expenses) incurred in advising, structuring, drafting, reviewing,
administering, amending, terminating, enforcing (including attorneys' fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning Borrower or any guarantor of the Obligations),
defending, or concerning the Loan Documents, irrespective of whether suit is
brought. The foregoing notwithstanding, unless an Event of Default has occurred
and is continuing and all the Obligations are currently due and payable (either
by their terms or following acceleration), Borrower shall not be responsible for
paying the fees, expenses, or disbursements of more than one set of attorneys
for the Lender Group.
"Lender-Related Person" means, with respect to any Lender, such
---------------------
Lender, together with such Lender's Affiliates, and the officers, directors,
managing directors, partners, employees, counsel, agents, and attorneys- in-fact
of such Lender and such Lender's Affiliates.
"Lien" means any interest in property securing an obligation owed to,
----
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
"Loan" means each related set of Advances made by the Lenders.
----
12
"Loan Account" has the meaning set forth in Section 2.8.
------------ -----------
"Loan Documents" means this Agreement, the Warrants, the Contingent
--------------
Warrants, the Fee Letter, the Cisco Subordination Agreement, the Holding Company
Guaranty (from and after the date that it is executed and delivered), any note
or notes executed by Borrower and payable to the Lender Group, and any other
agreement entered into, now or in the future, in connection with this Agreement.
"Material Adverse Change" means any material adverse change in the
-----------------------
financial, banking or capital market condition which individually or in the
aggregate could reasonably be expected to have a material adverse effect on the
consummation of the transactions contemplated hereby.
"Maturity Date" has the meaning set forth in Section 3.4.
------------- -----------
"Maximum Amount" means $30,000,000 which will be permanently reduced
--------------
as a result of prepayments made by Borrower (if any) pursuant to Sections 2.10
-------------
and 2.11.
- --------
"Maximum Rate" has the meaning set forth in Section 2.6(d).
------------ --------------
"Multiemployer Plan" means a "multiemployer plan" (as defined in
------------------
Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.
"Net Cash Proceeds" means the aggregate cash proceeds received
-----------------
(including any cash and cash equivalents and cash payments received by way of
deferred payment of principal pursuant to a note, an installment receivable or
otherwise, but only as and when received) from any Capital Markets Transaction.
"Net Funded Debt" means the total Indebtedness of Borrower, reduced by
---------------
the amount of cash and cash equivalents of Borrower on hand as of any date of
measurement thereof.
"New Capital Proceeds" means the net proceeds received by New Holding
--------------------
Company from any offerings of debt or equity securities after the Closing Date.
"New Holding Company" means a Delaware corporation to be created as
-------------------
part of the Holding Company Reorganization for the purpose of owning 100% of the
issued and outstanding shares of stock of Borrower.
"Obligations" means all loans, Advances, debts, principal, interest
-----------
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), liabilities (including all amounts charged to Borrower's
Loan Account pursuant hereto), obligations, fees, charges, costs, or Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties owing by Borrower to the Lender Group of any kind and description
(whether pursuant to or evidenced by the Loan Documents or pursuant to any other
agreement between the
13
Lender Group and Borrower, and irrespective of whether for the payment of
money), whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and including any debt, liability, or
obligation owing from Borrower to others that the Lender Group may have obtained
by assignment or otherwise, and further including all interest not paid when due
and all Lender Group Expenses that Borrower is required to pay or reimburse by
the Loan Documents, by law, or otherwise.
"Old Bell Atlantic Collections" means collections with respect to past
-----------------------------
due claims of Borrower against Bell Atlantic or its Subsidiaries arising out of
or related to Borrower's former agency relationship with Bell Atlantic or its
Subsidiaries (including net cash proceeds received from the litigation against
Bell Atlantic in a settlement or non-appealable court decision).
"Participant" has the meaning set forth in Section 14.1(e).
----------- ---------------
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
----
Title IV of ERISA, or any successor thereto.
"Permits" of a Person shall mean all rights, franchises, permits,
-------
authorities, licenses, certificates of approval or authorizations, including
licenses and other authorizations issuable by a Governmental Authority, which
pursuant to applicable Legal Requirements are necessary to permit such Person
lawfully to conduct and operate its business as currently conducted and to own
and use its assets.
"Permitted Distributions" means dividends or distributions by Borrower
-----------------------
to New Holding Company made after the effective date of the Holding Company
Reorganization pursuant to a budget submitted in advance by Borrower to Agent
and approved in advance by the Lender Group in its reasonable discretion, for
the purpose of paying the portion of reasonable holding company overhead, public
filing costs, accounting costs, and like expenses reasonably allocable to
Borrower (but not the portion of any such costs or expenses reasonably allocable
to other Subsidiaries of New Holding Company that are not Subsidiaries of
Borrower); provided that in no event shall such dividends or distributions be
made or used for the purpose of paying interest, fees, costs, or expenses with
respect to Indebtedness of, or paying cash dividends or other distributions in
respect of Stock of, New Holding Company or of any Subsidiary of New Holding
Company.
"Permitted Holder" means the Fabbricatore Related Parties or the
----------------
Spectrum Related Parties.
"Permitted Liens" means:
---------------
(a) Liens for unpaid taxes that either (i) are not yet due and payable
or (ii) are the subject of Permitted Protests;
(b) Liens set forth on Schedule P-1;
14
(c) the interests of lessors under operating leases;
(d) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted to be incurred by Section 6.1(j), provided that such
--------------
Liens cover only the assets permitted to be acquired with Indebtedness;
(e) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business of Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted Protests;
(f) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance;
(g) Liens or deposits to secure performance of bids, tenders, or
leases (to the extent that such leases are entered into in conformity with any
applicable provisions of this Agreement), incurred in the ordinary course of
business of Borrower and not in connection with the borrowing of money;
(h) Liens arising by reason of security for surety or appeal bonds in
the ordinary course of business of Borrower;
(i) Liens of or resulting from any judgment or award that reasonably
could not be expected to result in a Material Adverse Change and as to which the
time for the appeal or petition for rehearing of which has not yet expired, or
in respect of which Borrower is in good faith prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review has been secured;
(j) Liens on collateral granted to Cisco pursuant to the terms of the
Cisco Facility;
(k) with respect to any Real Property, easements, rights of way,
zoning and similar covenants and restrictions, and similar encumbrances that
customarily exist on properties of Persons engaged in similar activities and
similarly situated that do not materially interfere with the ordinary conduct of
the business of Borrower; and
(l) Liens on collateral granted to Fleet and Goldman pursuant to the
terms of the Credit Facility.
"Permitted Protest" means the right of Borrower to protest any Lien,
-----------------
tax (other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the books of Borrower in an amount that is
reasonably satisfactory to Agent and (b) any such protest is instituted and
diligently prosecuted by Borrower in good faith.
15
"Person" means and includes natural persons, corporations, limited
------
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means any employee benefit plan, program, or arrangement
----
maintained or contributed to by Borrower or with respect to which it may incur
liability.
"Prepayment Date" has the meaning set forth in Section 2.13.
--------------- ------------
"Prime Rate" means the rate of interest per annum established from
----------
time to time by Agent as its prime rate. The Prime Rate is not necessarily the
best or the lowest rate of interest offered by Agent.
"Projections" means Borrower's forecasted (a) balance sheets, (b)
-----------
profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" means:
--------------
(a) with respect to a Lender's obligation to make Advances or to
indemnify Agent-Related Persons pursuant to Section 16.7, the percentage
------------
obtained by dividing (i) such Lender's Commitment, by (ii) all such Commitments
of all Lenders; and
(b) with respect to all other matters, the percentage obtained by
dividing (i) the aggregate outstanding principal amount of such Lender's
Advances, by (ii) the Aggregate Facility Usage, provided, however, that if there
are no Advances outstanding, the Pro Rata Share shall be calculated by the
formula contained in subsection (a) of this definition.
"Real Property" means any estates or interests in real property now
-------------
owned or hereafter acquired by Borrower.
"Regulatory Change" means any adoption, interpretation, or change of
-----------------
any statute, law, order, regulation, or directive.
"Reportable Event" means any of the events described in Section
----------------
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
----------------
aggregate more than 50.00% of the Commitments, or if the Commitments have been
terminated irrevocably, more than 50.00% of the Obligations then outstanding.
16
"Retiree Health Plan" means an "employee welfare benefit plan" within
-------------------
the meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Solvent" means, with respect to any Person on a particular date, that
-------
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Spectrum Related Parties" means Spectrum Equity Investors, L.P. and
------------------------
any of its Subsidiaries.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed dated on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred) and, when used with respect to
any installment of interest on such security, the fixed date on which such
installment of interest is due and payable.
"Stock" means all shares, options, warrants, interests,
-----
participations, or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
----------
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"TD Texas" means Toronto Dominion (Texas), Inc., a Delaware
--------
corporation, in its capacity as a Lender.
17
"Telecommunications Business" means the business of (i) transmitting,
---------------------------
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in (i) above or (iii) evaluating, participating or pursuing any other
activity or opportunity that is related or ancillary to those specified in (i)
or (ii) above and includes, without limitation, any business in which Borrower
and its Subsidiaries are engaged at the Closing Date; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the Board of Directors of Borrower.
"Threshold Percentage" means, as of any date of determination, (a) if
--------------------
the aggregate percentage of the total voting power of all classes of Stock of
Borrower or New Holding Company, as applicable, then outstanding and
beneficially owned (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) by the Permitted Holders equals or exceeds 30%, then the Threshold
Percentage is 40%, and (b) if the aggregate percentage of the total voting
power of all classes of Stock of Borrower or New Holding Company, as applicable,
then outstanding and beneficially owned (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act) by the Permitted Holders is less than 30%,
then the Threshold Percentage is such aggregate percentage.
"VA Sub" means CTC Communications of Virginia Inc., a Virginia
------
corporation, which is a wholly owned Subsidiary of Borrower.
"Voidable Transfer" has the meaning set forth in Section 17.7.
----------------- ------------
"Warrant Shares" means the shares of common stock of Borrower issued
--------------
upon exercise of the Contingent Warrants and Warrants.
"Warrants" means those certain warrants to purchase common stock of
--------
Borrower, issued to the Lenders or their designees (in accordance with their Pro
Rata Shares) by Borrower, in form and substance satisfactory to Agent and each
Lender, on the Closing Date for the purchase of 0.5% of the outstanding equity
of Borrower, calculated using the treasury stock method as of the day preceding
the Closing Date using a fair market value of the common stock equal to the
Average Price as of March 11, 1999. The Warrants shall have an exercise price
equal to 100% of the Average Price as of March 11, 1999.
"Year 2000 Compliant" means, with regard to any Person, that all
-------------------
software in goods produced or sold by, or utilized by and material to the
business operations or financial condition of, such Person are able to interpret
and manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenario, including in relation to dates in and
after the year 2000.
1.2. Accounting Terms.
----------------
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term "financial
statements" shall include the notes and schedules thereto.
18
1.3. Construction. Unless the context of this Agreement or any other
------------
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Agent. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable.
1.4. Schedules and Exhibits. All of the schedules and exhibits
----------------------
attached to this Agreement shall be deemed incorporated herein by reference.
With the consent of the Required Lenders, which shall not unreasonably be
withheld, Borrower from time to time may update or supplement the schedules to
the Loan Documents.
2. LOAN AND TERMS OF PAYMENT.
-------------------------
2.1. Advances.
--------
(a) Subject to the terms and conditions of this Agreement, from and
after the date of this Agreement to but excluding the Maturity Date, each Lender
severally agrees to make advances ("Advances") to Borrower in an aggregate
--------
principal amount not to exceed such Lender's Commitment. Each Advance funded by
a Lender shall constitute a permanent reduction in such Lender's Commitment in
an amount equal to the principal amount funded.
(b) Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this Section 2.1 may be prepaid during the term of this
-----------
Agreement, but may not be reborrowed.
(c) Each Loan comprised of the Advances made by the Lenders on any
Funding Date shall be in a minimum aggregate principal amount of $1,000,000 (or
in larger integral multiples of $500,000).
2.2. Requirements of Law.
-------------------
(a) In the event that any Regulatory Change shall:
(i) change the taxation of any amounts payable to any
Lender under this Agreement or any note issued pursuant hereto in respect
of any Advance (other than taxes imposed on the net income of such Lender);
19
(ii) impose or modify any reserve, compulsory loan
assessment, special deposit or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, any applicable office of such Lender (including any of such
Advances); or
(iii) impose any other conditions affecting this
Agreement in respect of Advances (or any of such extensions of credit,
assets, deposits or liabilities);
and the result of any of the foregoing shall be to increase such Lender's costs
of making or maintaining any of its Advances or its Commitment, or to reduce any
amount receivable by such Lender hereunder in respect of any of its Advances or
its Commitment, in each case only to the extent that such additional amounts are
not already included in the interest rate applicable to such Advance, then
Borrower shall pay on demand to Agent, for the account of such Lender, and from
time to time as specified by such Lender, such additional amounts as such Lender
shall reasonably determine are sufficient to compensate such Lender for such
increased cost or reduced amount receivable.
(b) If at any time after the date of this Agreement any Lender shall
have determined that the applicability of any law, rule, regulation or guideline
adopted after the Closing Date pursuant to, or arising after the Closing Date
out of, the July 1988 report of the Basle Committee on Lending Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards", or the adoption or implementation after the Closing Date
of any other Regulatory Change regarding capital adequacy or any change after
the Closing Date in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof (whether or not having the force of
law), has or will have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of the existence of its obligations hereunder to a level below
that which such Lender or its holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
with respect to capital adequacy) by an amount reasonably deemed by such Lender
to be material, then from time to time following written notice by such Lender
to Borrower as provided in paragraph (c) of this Section, within fifteen (15)
days after demand by such Lender, Borrower shall pay to such Lender, through
Agent, such additional amount or amounts as such Lender shall reasonably
determine will compensate such Lender or such Lender's holding company, as the
case may be, for such reduction, provided that to the extent that any or all of
Borrower's liability under this Section arises following the date of the
adoption of any such Regulatory Change (the "Effective Date"), such compensation
--------------
shall be payable only with respect to that portion of such liability arising
after notice of such Regulatory Change is given by such Lender to Borrower
(unless such notice is given within sixty (60) days after the Effective Date, in
which case such compensation shall be payable in full).
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify Borrower of the event by
reason of which it has become so entitled. A certificate setting forth in
reasonable detail the computation of any
20
additional amounts payable pursuant to this Section shall be delivered to
Borrower and the other Lenders promptly after the incurrence of such additional
amounts and such certificate shall be presumed correct in the absence of
manifest error. The covenants contained in this Section shall survive the
termination of this Agreement and the payment of the outstanding Obligations. No
failure on the part of any Lender to demand compensation under paragraph (a) or
(b) above on any one occasion shall constitute a waiver of its rights to demand
compensation on any other occasion. The protection of this Section shall be
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of any law, regulation or other condition which shall give
rise to any demand by such Lender for compensation thereunder. In the event that
any of the losses or payments for which any Lender or its holding company is
compensated under this Section are reimbursed or otherwise restored to such
Lender or its holding company for any reason, including the rescission,
nullification or retroactive modification of any such Regulatory Change, such
Lender shall reimburse Borrower accordingly as soon as reasonably practicable.
2.3. Borrowing Procedures and Settlements.
------------------------------------
(a) Procedure for Borrowing. Each Loan shall be made upon
-----------------------
Borrower's irrevocable request therefor delivered to Agent (which notice must be
received by Agent no later than 11:00 a.m. (New York time) on the third Business
Day prior to the requested Funding Date) specifying (i) the amount of such Loan,
and (ii) the requested Funding Date, which shall be a Business Day.
Notwithstanding the foregoing, if Agent has previously notified
the Borrower pursuant to Section 2.5 of the unavailability of the Eurodollar
-----------
Rate Advances, while such unavailability continues all Loans shall be Base Rate
Advances, which shall be made upon Borrower's irrevocable request therefor
delivered to Agent (which notice must be received by Agent no later than 11:00
a.m. (New York time) on the first Business Day prior to the requested Funding
Date) specifying (i) the amount of such Loan, and (ii) the requested Funding
Date, which shall be a Business Day.
(b) Disbursement of Funds. Agent may, on behalf of the Lenders,
---------------------
disburse funds to Borrower for Loans requested. Unless Agent shall have
received notice from a Lender prior to a Funding Date that such Lender will
not make available its Pro Rata Share of a Loan requested by Borrower,
Agent may assume that such Lender has made such amount available to Agent
on the Business Day following the Funding Date. If a Lender has not in fact
made its Pro Rata Share available to Agent on such date, then such Lender
and Borrower severally agree to pay to Agent forthwith on demand such
amount without set-off, counterclaim or deduction of any kind, together
with interest thereon, for each day from and including the date such amount
was to have been made available to Agent by such Lender to, but excluding,
the date of payment to Agent, at (a) in the case of such Lender, the
Federal Funds Rate, or (b) in the case of Borrower, the interest rate
applicable under this Agreement with respect to such Loan. Until any such
amount is paid to Agent, Agent shall not be obligated to submit to such
Lender any payment made by Borrower to Agent with respect to any Loan or
any fees or other
21
payments with respect thereto. Nothing contained in this Section 2.3(b)
--------------
will be deemed to relieve a Lender of its obligation to fulfill its
Commitment or to prejudice any rights Agent or Borrower may have against
such Lender as a result of any such default by such Lender under this
Agreement.
(c) Return of Payments.
------------------
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind together with
interest thereon, for each day from and including the date such amount is
made available by Agent to such Lender to, but excluding, the date of
repayment to Agent, at the Federal Funds Rate, and such payment to such
Lender shall be deemed to not have been made.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any
other person pursuant to any requirement at law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such
amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(d) Lenders' Failure to Perform. It is understood that (i) no
---------------------------
Lender shall be responsible for any failure by any other Lender to perform its
Commitment, nor shall the Commitment of any Lender be increased or decreased as
a result of any failure by any other Lender to perform its Commitment, and (ii)
no failure by any Lender to perform its Commitment to make any Advance hereunder
shall excuse any other Lender from its Commitment to make any Advance hereunder.
2.4. Payments.
--------
(a) Payments by Borrower.
--------------------
(i) All payments to be made by Borrower shall be made
without set-off, recoupment, deduction, or counterclaim, except as
otherwise required by law. Except as otherwise expressly provided herein,
all payments by Borrower shall be made to Agent for the account of the
Lenders at Agent's address set forth in Section 11, and shall be made in
----------
immediately available funds, no later than 2:30 p.m. (New York time) on the
date specified herein. Any payment received by Agent later than 2:30 p.m.
(New York time), at the option of Agent, shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
22
(ii) Whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(iii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not make
such payment in full as and when required, Agent may assume that Borrower
has made such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent Borrower
has not made such payment in full to Agent, each Lender shall repay to
Agent on demand such amount distributed to such Lender, together with
interest thereon at the Base Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment, Application, and Reversal of Payments.
----------------------------------------------------
Except as otherwise provided with respect to defaulting Lenders, aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Advances to which such
payments relate held by each Lender) and payments of the fees (other than fees
designated for Agent's sole and separate account) shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to Agent
and all such payments not relating to principal or interest of specific Advances
or loans, or not constituting payment of specific fees, shall be applied as in
the following order:
(i) to pay any fees, or expense reimbursements then due to
Agent from Borrower;
(ii) to pay any fees or expense reimbursements then due to the
Lenders from Borrower;
(iii) to pay interest due in respect of all outstanding Loans;
(iv) ratably to pay principal of all outstanding Loans; and
(v) ratably to pay any other Obligations due to Agent or any
Lender by Borrower.
2.5. Unavailability of the Eurodollar Rate. If any Lender determines
-------------------------------------
that maintenance of its Eurodollar Rate Advances at a suitable Eurodollar
Lending Office would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders determine
that (i) deposits of a type and maturity appropriate to match-fund Eurodollar
Rate Advances are not available or (ii) the Eurodollar Rate does not accurately
reflect the cost of making or maintaining Eurodollar Rate Advances, then, upon
written notice from Agent to Borrower, the Advances shall automatically become
Base Rate Advances.
23
2.6. Interest: Rates, Payments, and Calculations.
--------------------------------------------
(a) Interest Rate Applicable to Advances. Except as provided
------------------------------------
in Section 2.5, all Advances shall be Eurodollar Rate Advances. Subject
-----------
to Sections 2.6(c) and (d) below:
-----------------------
(i) if an Advance is a Base Rate Advance, the unpaid
principal balance thereof shall bear interest until paid at a rate per
annum equal to the sum of the Base Rate plus the Applicable Margin,
changing when and as the Base Rate and/or the Applicable Margin changes,
and
(ii) if an Advance is a Eurodollar Rate Advance, the unpaid
principal balance thereof shall bear interest until paid at a rate per
annum equal to the sum of the Eurodollar Rate plus the Applicable Margin,
changing on the first day of each Interest Period when and as the
Eurodollar Rate and/or the Applicable Margin changes.
(b) Basis of Computation of Interest; Payment of Interest.
-----------------------------------------------------
All interest shall be calculated for actual days elapsed on the basis of a 360-
day year (or, in the case of Base Rate Advances, a 365- or 366-, as appropriate,
day year) and shall be payable in arrears not later than 2:30 p.m. (New York
City time) on each Interest Payment Date by wire transfer of immediately
available funds.
(c) Default Interest. If Borrower shall default in the payment of
-----------------
the principal of or interest on any Advance or any other Obligation becoming due
hereunder, by acceleration or otherwise, or under any other Loan Document,
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount to but excluding the date of actual payment
(after as well as before judgment) to the extent lawful, at a rate per annum
equal to 200 basis points in excess of the otherwise applicable interest rate on
the Advances. Borrower shall pay such default interest and all interest accruing
on any overdue Obligation in cash on demand from time to time.
(d) Intent to Limit Rate. In no event shall the interest rate or
--------------------
rates payable under this Agreement, exceed the lesser of (i) 16.0% per annum and
(ii) the highest rate permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable (such lesser rate
being the "Maximum Rate"). Borrower and the Lender Group, in executing and
------------
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the Maximum Rate, then, ipso facto as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such Maximum Rate, and payment received from Borrower in excess of
such Maximum Rate, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7. Telephonic Instructions. Agent and the Lenders are authorized to
-----------------------
make the Advances under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person;
provided, however, that such instructions are
24
promptly followed by written confirmation from the Borrower which is signed by
an Authorized Person.
2.8. Maintenance of Loan Account; Statements of Obligations. Agent
------------------------------------------------------
shall maintain an account on its books in the name of Borrower (the "Loan
----
Account") on which Borrower will be charged with all Advances made by Agent
- -------
or the Lenders to Borrower or for Borrower's account, including, accrued
interest, Lender Group Expenses, and any other payment Obligations of Borrower.
Agent shall render monthly statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements shall
be conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and the Lender Group unless, within 30 days after
receipt thereof by Borrower, Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.9. Certain Fees. Borrower agrees to pay to Agent, for its own
------------
account, the fees specified in the Fee Letter in an amount previously agreed to
with Agent, with respect to the Advances, the Commitment, amounts for its
expenses incurred hereunder and all other amounts owing under this Agreement and
the other Loan Documents.
2.10. Mandatory Prepayment. Borrower shall prepay the Loans, ratably
--------------------
amongst Lenders in accordance with their respective Pro Rata Shares, with the
Net Cash Proceeds received by Borrower or the New Holding Company from the
borrowing, sale or placement of any equity (other than any issuance to satisfy
the $5,000,000 requirement described in Section 3.2(d)) or senior or
--------------
subordinated debt in a public offering or private placement or in a bank
financing (excluding (i) any proceeds up to $75,000,000 received from the
Credit Facility as in effect on the Closing Date or pursuant to amendments
to the borrowing base entered into from time to time thereafter and
(ii) proceeds from any vendor, lease or purchase money financing) (each, a
"Capital Markets Transaction"). Borrower shall, not later than the
---------------------------
Business Day immediately following any Capital Markets Transaction, apply such
Net Cash Proceeds to prepay the Loans pursuant to this Section 2.10, without
------------
premium or penalty, by paying to Agent on behalf of each Lender an amount equal
to 100% of such Lender's pro rata share of the aggregate principal amount of the
Loans to be prepaid, plus accrued and unpaid interest thereon to the Prepayment
Date and any applicable breakage costs. To the extent that such Net Cash
Proceeds exceed amounts due hereunder under the preceding sentence, any excess
net proceeds shall constitute a dollar for dollar permanent reduction of the
Maximum Amount. Amounts prepaid may not be reborrowed.
2.11. Optional Prepayment. Borrower may, upon three Business Days'
-------------------
prior written notice to Agent, prepay the Loans ratably amongst the Lenders, in
whole or in part, by paying to Agent on behalf of each applicable Lender an
amount equal to 100% of such Lender's pro rata share of the aggregate principal
amount of Advances to be prepaid, plus accrued and unpaid interest thereon to
the Prepayment Date and any applicable breakage costs; provided, however, that
each partial prepayment of the Loans shall be in a minimum amount of
$1,000,000 (or larger integral multiples of $500,000). Amounts prepaid
pursuant to this Section 2.11 may not be reborrowed.
------------
25
2.12 Breakage Costs; Indemnity. Borrower agrees to indemnify and
-------------------------
hold each Affected Party harmless from and against any loss or expense
which such Affected Party sustains or incurs as a consequence of:
(a) the failure by Borrower to borrow Eurodollar Rate Advances on the
Closing Date after Borrower has given a notice with respect thereof in
accordance with Section 2.3,
-----------
(b) default by Borrower in making any prepayment after Borrower has
given a notice thereof in accordance with the provisions of Section 2.10 or
---------------
2.11, as applicable, or
- ----
(c) the mandatory or optional prepayment of Eurodollar Rate Advances
on a day that is not the last day of an Interest Period.
The amount of such indemnification shall be equal to the excess, if any of (i)
such Affected Party's actual loss and expenses incurred (excluding lost profits)
in connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Advances not so made or the principal amount of Advances so
prepaid from the date of such proposed issuance or prepayment in the case of a
failure to make Advances, to the last day of the Interest Period that would have
commenced on the proposed date of funding, or in the case of any such
prepayment, to the last day of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Advances
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (B) the amount of interest (as reasonably determined by such
Affected Party) which would have accrued to such Affected Party on such amount
by placing such amount on deposit for a period comparable to such Interest
Period with leading banks in the interbank Eurodollar market. A certificate as
to any amounts payable pursuant to this Section 2.12 submitted to Borrower by
------------
any Affected Party shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
2.13. Effect of Notice of Prepayment. Borrower shall notify Agent
------------------------------
in writing at its address shown in Section 11 of any date set for prepayment
----------
(each such day, a "Prepayment Date") of Loans. Once such notice is sent or
---------------
mailed, the Loans (or portion thereof) to be prepaid shall become due and
payable on the Prepayment Date set forth in such notice. Each such notice shall
be irrevocable and may not be conditional.
2.14. Subordination. Notwithstanding anything in this Agreement to
-------------
the contrary, the Lenders agree that the Obligations of Borrower hereunder are
subordinated to Borrower's obligations under the Cisco Facility, to the extent
and in the manner provided by the Cisco Subordination Agreement.
3. CONDITIONS; TERM OF AGREEMENT.
-----------------------------
3.1. Conditions Precedent to the Initial Advance. The obligation
--------------------------------------------
of each Lender to make its initial Advance is subject to the fulfillment, to the
satisfaction of Agent, each Lender, and Agent's counsel, of each of the
following conditions on or before the Closing Date:
26
(a) the Closing Date shall occur on or before March 24, 1999;
(b) Agent shall have received each of the Loan Documents (except the
Class B Contingent Warrants), duly executed by each of the parties thereto, and
each such document shall be in full force and effect;
(c) the Class A Contingent Warrants shall have been duly authorized
and executed by Borrower, and delivered to the Agent;
(d) the Warrants shall have been duly authorized and executed by
Borrower, and delivered to the Agent;
(e) Agent shall have received a certificate from the Clerk of Borrower
attesting to the resolutions of Borrower's Board of Directors authorizing its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific officers of
Borrower to execute the same;
(f) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Clerk of Borrower;
(g) Agent shall have received a certificate of status with respect to
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(h) Agent shall have received certificates of status with respect to
Borrower, each dated within 15 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(i) Agent shall have received an opinion of Borrower's counsel in form
and substance satisfactory to Agent and each Lender in their sole discretion;
(j) Agent shall have received a Treasurer's Certificate stating that
all tax returns required to be filed by Borrower have been timely filed and all
taxes upon Borrower or its properties, assets, income, and franchises (including
real property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest;
(k) Agent shall have received payment of all accrued and unpaid Lender
Group Expenses;
(l) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent and its
counsel;
27
(m) the Credit Facility shall be in place and available to Borrower,
in accordance with its terms; and
(n) since January 22, 1999: (i) no new information relating to
conditions or events not previously disclosed to the Lenders in connection with
the Commitments, and (ii) no new information or additional development
concerning conditions or events which were previously disclosed by Borrower or
its affiliates in connection with the Commitments shall have come to the
Lenders' attention which, in either case, any Lender reasonably believes may
have a material adverse effect on the condition (financial or otherwise),
assets, properties, business or prospects of Borrower and its subsidiaries taken
as a whole; in the event that any such new information or additional development
comes to the Lenders' attention or any of the conditions precedent hereunder are
not met, the Lenders may, in their sole discretion, suggest alternative
financing amounts or structures that ensure adequate protection for the Lenders
or decline to make Advances hereunder.
3.2. Conditions Precedent to all Advances. The obligation of each
------------------------------------
Lender to make each Advance (including the initial Advance) is subject to each
of the following being true as of the applicable Funding Date:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any governmental authority against
Borrower, Agent, any Lender, or any of their Affiliates;
(d) notwithstanding anything else in this Agreement to the contrary,
the Lenders will not be obligated to make an Advance in the situation where such
Advance would cause the Aggregate Facility Usage to exceed $10,000,000, unless
Borrower obtains prior to such Advance, an additional $5,000,000 in net cash
proceeds from the sale or placement of its common or preferred equity; provided,
however that if Borrower receives in excess of $10,000,000 in net cash proceeds
from the litigation against Bell Atlantic Corporation in a settlement or a non-
appealable court decision, such $5,000,000 requirement will be reduced on a
dollar for dollar basis to the extent such amount exceeds $10,000,000, as long
as such net proceeds are used in a manner consistent with Section 5.17;
------------
(e) the absence since December 31, 1998 (the date of the most recent
unaudited quarterly financials of Borrower made available to TD Texas and TDSI
prior to the Closing Date) of any material adverse change in the business,
assets, liabilities (actual or
28
contingent), operations, prospects or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole;
(f) after the six month anniversary of the Closing Date, on or before
the date of any Advance, the Borrower shall deliver to the Agent, for the
benefit of the Lenders, duly authorized and executed Class B Contingent Warrants
in form and substance satisfactory to the Lenders, prior to the Lenders making
any Advance; and
(g) if requested by any Lender, the Borrower shall have executed and
delivered a note or notes in form and substance satisfactory to the Lenders to
evidence the obligation of any Advance.
3.3. Condition Subsequent.
--------------------
As a condition subsequent to initial closing hereunder, Borrower shall
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default) on or before September 30, 1999, consummate the Holding
Company Reorganization, and deliver to Agent the Holding Company Guaranty, duly
executed by New Holding Company; provided, however, that if within such time,
Borrower has obtained approval of the Holding Company Reorganization from
Borrower's board of directors and shareholders, and the Holding Company
Reorganization is not consummated within such time solely because Borrower has
not received approvals from such regulatory and other governmental agencies as
are required to consummate the Holding Company Reorganization, then so long as
Borrower is diligently proceeding with obtaining such approvals, Borrower shall
have such time as is reasonably necessary to obtain comply with the provisions
contained in this subsection;
3.4. Term. This Agreement shall become effective upon the execution
----
and delivery hereof by Borrower and the Lender Group and shall continue in full
force and effect until the fifteen month anniversary of the Closing Date (the
"Maturity Date"), unless sooner terminated pursuant to the terms hereof. The
-------------
foregoing notwithstanding, the Commitments may be terminated pursuant to
Section 8.1 upon the occurrence and during the continuation of an Event of
- -----------
Default.
3.5. Effect of Termination. On the date of termination of this
---------------------
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of Borrower's duties, Obligations, or covenants hereunder,
for the benefit of the Lender Group, shall remain in effect until all
Obligations have been fully and finally discharged and the Lenders' obligations
to provide additional credit hereunder have been terminated.
29
3.6. Early Termination by Borrower. Borrower has the option, at any
-----------------------------
time upon three Business Days prior written notice to Agent, to terminate this
Agreement by paying to Agent, for the ratable benefits of the Lender Group, in
cash, the Obligations equal to 100% times the Aggregate Facility Usage, plus
accrued interest, fees and any breakage costs payable pursuant to Section 2.11.
------------
In the event any such notice is timely received by Agent, and Borrower
thereafter fails to timely pay to Agent the amount set forth in the immediately
preceding sentence, such notice shall be deemed to never have been given.
4. REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Lender Group to enter into this Agreement,
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete in all respects as of the date
hereof, and shall be true, correct, and complete in all respects as of the
Closing Date, and at and as of the date of the making of each Advance
thereafter, as though made on and as of the date of such Advance (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
4.1. Due Organization and Qualification; Subsidiaries.
------------------------------------------------
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified reasonably could be expected to have a Material
Adverse Change.
(b) Set forth on Schedule 4.1, is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding and the number of such shares that are held in
Borrower's treasury. Other than as described on Schedule 4.1, all such
outstanding shares have been validly issued and, as of the Closing Date, are
fully paid and nonassessable shares as to which there are no contractual
preemptive rights. The issuance and sale of all such shares have been in
compliance with all applicable federal and state securities laws. Other than as
described on Schedule 4.1, on the Closing Date, there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower's capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. Other than as described on Schedule 4.1, Borrower is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 4.1, is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
30
(d) Except as set forth on Schedule 4.1, no Stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Stock) of any direct or indirect Subsidiary of Borrower is
subject to the issuance of any security, instrument, warrant, option, purchase
right, conversion or exchange right, call, commitment or claim of any right,
title, or interest therein or thereto.
(e) VA Sub is the only Subsidiary of the Borrower and it exists
solely for the purpose of complying with regulatory requirements of Virginia
law, has no material assets other than governmental licenses and permits, and
does not engage in active business operations other than proposed sales
operations. As of the date hereof, the fair market value of the Borrower's
investment in VA Sub (measured as of the time such investment or investments
were made) is less than $100,000.
4.2. Due Authorization; No Conflict.
------------------------------
(a) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
(including Regulations T, U, and X of the Federal Reserve Board) applicable to
Borrower, the Governing Documents of Borrower, or any order, judgment, or decree
of any court or other Governmental Authority binding on Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation or material lease of
Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, or (iv) require
any approval of stockholders or any approval or consent of any Person under any
material contractual obligation of Borrower.
(c) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any federal, state, foreign, or other Governmental
Authority or other Person.
(d) This Agreement and the other Loan Documents to which Borrower
is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) The Contingent Warrants and the Warrants have been duly
authorized by Borrower and, when executed and authenticated pursuant to their
respective terms and delivered to the Lenders, will be valid and binding
obligations of Borrower, enforceable
31
against it in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at law or in equity).
(f) The Warrant Shares have been duly authorized and when validly
issued, upon exercise of the Contingent Warrants and the Warrants in accordance
with their respective terms will be fully paid and nonassessable.
4.3. Litigation. There are no actions or proceedings pending by or
----------
against Borrower before any court or administrative agency and Borrower does not
have knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any guarantor of the Obligations, except for:
(a) ongoing collection matters in which Borrower is the
plaintiff;
(b) matters disclosed on Schedule 4.3; and
(c) matters arising after the date hereof that, if decided
adversely to Borrower, reasonably could not be expected to result in a Material
Adverse Change.
4.4. No Material Adverse Change. All financial statements relating to
--------------------------
Borrower or any guarantor of the Obligations that have been delivered by
Borrower to the Lender Group have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to year- end audit adjustments) and fairly present Borrower's (or
such guarantor's, as applicable) financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrower (or such guarantor, as
applicable) since December 31, 1998.
4.5. Fraudulent Transfer.
-------------------
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
4.6. Employee Benefits. None of Borrower, any of its Subsidiaries, or
-----------------
any of their ERISA Affiliates maintains or contributes to any Benefit Plan,
other than those listed on Schedule 4.6. Borrower, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse
32
Change. None of Borrower or its Subsidiaries, any ERISA
Affiliate, or any fiduciary of any Plan is subject to any direct or indirect
liability with respect to any Plan under any applicable law, treaty, rule,
regulation, or agreement. None of Borrower or its Subsidiaries or any ERISA
Affiliate is required to provide security to any Plan under Section 401(a)(29)
of the IRC.
4.7. Environmental Condition. None of Borrower's properties or assets
-----------------------
has ever been used by Borrower or, to the best of Borrower's knowledge, by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials. None of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, or a candidate for closure pursuant to any environmental
protection statute. No Lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned or
operated by Borrower. Borrower has not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower resulting in
the releasing or disposing of Hazardous Materials into the environment.
4.8. Brokerage Fees. Except as contemplated in the Fee Letter, no
--------------
brokerage commission or finders fees has or shall be incurred or payable in
connection with or as a result of Borrower's obtaining financing from the Lender
Group under this Agreement, and Borrower has not utilized the services of any
broker or finder in connection with Borrower's obtaining financing from the
Lender Group under this Agreement.
4.9. Year 2000 Compliance.
--------------------
(a) On the basis of a comprehensive inventory, review and
assessment currently being undertaken by Borrower of Borrower's computer
applications utilized by Borrower or contained in products produced or sold by
Borrower, and upon inquiry made of Borrower's material suppliers and vendors,
Borrower's management is of the considered view that Borrower, its products, and
all such suppliers and vendors will be Year 2000 Compliant before October 1,
1999.
(b) Borrower (i) has undertaken a detailed inventory, review and
assessment of all areas within its business and operations that could be
adversely affected by the failure of Borrower or its products to be Year 2000
Compliant on a timely basis, (ii) is developing a detailed plan and timeline for
becoming Year 2000 Compliant on a timely basis, and (iii) to date, is
implementing that plan in accordance with that timetable in all material
respects. Borrower reasonably anticipates that it will be Year 2000 Compliant on
a timely basis.
4.10. Intellectual Property. Borrower and each of its Subsidiaries
---------------------
own, or hold licenses in, all trademarks, trade names, copyrights, patents,
patent rights, and licenses which are necessary in all material respects to
conduct their respective businesses and to operate their respective properties
as now conducted and operated. The consummation of the transactions contemplated
by this Agreement and the Loan Documents will not alter or impair any of such
rights of Borrower or any of its Subsidiaries.
33
4.11. Leases. Borrower and each of its Subsidiaries enjoy peaceful and
------
undisturbed possession under all leases material to the business, operations,
and financial condition of Borrower and its Subsidiaries, taken as a whole, to
which any of them is a party or under which any of them is operating. All of
such leases are valid and subsisting and no material default by Borrower or any
of its Subsidiaries exists under any of them.
4.12. Existing Indebtedness. As of the Closing Date and since the date
---------------------
of the Credit Facility, all Indebtedness incurred by Borrower and its
Subsidiaries have been in compliance with the terms of the Credit Facility. As
of the Closing Date, Indebtedness of the Company does not exceed $75,000,000, in
the aggregate.
5. AFFIRMATIVE COVENANTS.
---------------------
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, and
unless the Lender Group shall otherwise consent in writing, Borrower shall do
all of the following:
5.1. Accounting System. Maintain a standard and modern system of
-----------------
accounting that enables Borrower to produce financial statements in accordance
with GAAP.
5.2. Financial Statements, Reports, Certificates. Deliver to each
-------------------------------------------
Lender:
(a) as soon as available, but in any event within 45 days after
the end of each month during each of Borrower's fiscal years, a company prepared
balance sheet, income statement, and statement of cash flow covering Borrower's
operations during such period (including quarterly information with respect to
each month that is the end of a fiscal quarter of Borrower); provided that
monthly financial statements with respect to any month that is not the last
month of a fiscal quarter of Borrower need not contain all detail that would be
required by GAAP, may be subject to quarter-end and year-end adjustments, and
will be sufficient hereunder if they are in the same form as is submitted
internally by Borrower to the senior management of Borrower, and quarterly
financial statements of Borrower may be subject to year-end adjustments; and
(b) as soon as available, but in any event within 90 days after
the end of each of Borrower's fiscal years, financial statements of Borrower for
each such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any qualifications, by
such accountants to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Agent stating that such accountants
do not have knowledge of the existence of any Default or Event of Default. Such
audited financial statements shall include a balance sheet, profit and loss
statement, and statement of cash flow and, if prepared, such accountants' letter
to management. If Borrower is a parent company of one or more Subsidiaries, or
Affiliates, or is a Subsidiary or Affiliate of another company, then, in
addition to the financial statements referred to above, Borrower agrees to
deliver financial statements prepared on a consolidating basis so as to present
Borrower and each such related entity separately, and on a consolidated basis.
34
Together with the above, Borrower also shall deliver to Agent, with
copies to each Lender, Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made by Borrower
with the Securities and Exchange Commission, if any, as soon as the same are
filed, or any other information that is provided by Borrower to its
shareholders, and any other report reasonably requested by the Lender Group
relating to the financial condition of Borrower (including, without limitation,
any oral reports regarding the status of Borrower's litigation with Bell
Atlantic from time to time requested by Agent).
Each month, together with the financial statements provided pursuant
to Section 5.2(a), Borrower shall deliver to Agent, with copies to each Lender,
--------------
a certificate signed by its treasurer or chief financial officer to the effect
that:
(i) all financial statements delivered or caused to be
delivered to any one or more members of the Lender Group hereunder
have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes or other
detail and being subject to year-end (and in the case of monthly
statements for months other than the last month of a fiscal quarter of
Borrower, quarter-end adjustments, and provided, further, that, with
respect to such monthly statements, such certificate may be qualified
by the representation that such financial statements may not be fully
in compliance with GAAP but are in the same form as is provided
internally by Borrower to the senior management of Borrower) and
(subject to the qualifications permitted above) fairly present the
financial condition of Borrower,
(ii) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date), and
(iii) on the date of delivery of such certificate to Agent
there does not exist any condition or event that constitutes a Default
or Event of Default (or, in the case of clauses (i) or (ii), to the
extent of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrower has taken,
is taking, or proposes to take with respect thereto).
Subject to the limitation contained at the end of this paragraph, Borrower shall
have issued written instructions to its independent certified public accountants
authorizing them to communicate with Agent and to release to Agent whatever
financial information concerning Borrower that Agent may request. Borrower
hereby irrevocably authorizes and directs all auditors, accountants, or other
third parties to deliver to Agent, at Borrower's expense, copies of Borrower's
financial statements, papers related thereto, and other accounting records of
any nature in their possession, and to disclose to Agent any information they
may have regarding Borrower's business affairs and financial conditions. The
foregoing notwithstanding, Agent shall request any such information in the first
instance from Borrower, shall give Borrower a reasonable opportunity itself to
obtain such information for Agent and provide same to Agent,
35
and shall not directly contact Borrower's auditors, accountants, or other third
parties unless Borrower fails to provide the requested information within 10
days.
5.3. Tax Returns. Deliver to Agent copies of each of Borrower's future
-----------
federal income tax returns, and any amendments thereto, within 30 days of the
filing thereof with the Internal Revenue Service. Deliver satisfactory evidence
of payment of applicable excise taxes in each jurisdictions in which (a)
Borrower conducts business or is required to pay any such excise tax, (b) where
Borrower's failure to pay any such applicable excise tax would result in a Lien
on the properties or assets of Borrowers, or (c) where Borrower's failure to pay
any such applicable excise tax would constitute a Material Adverse Change.
5.4. Guarantor Reports. After the Holding Company Reorganization is
-----------------
consummated, cause New Holding Company to deliver its annual financial
statements at the time when Borrower provides its audited financial statements
to Agent and copies of all federal income tax returns as soon as the same are
available and in any event no later than 30 days after the same are required to
be filed by law.
5.5. Certain Information in Connection With Acquisitions. Prior to
---------------------------------------------------
making any acquisition governed by Section 6.12(a), Borrower shall provide to
---------------
Agent updated Projections through the Maturity Date that give effect to such
acquisition on a pro forma basis and demonstrate that Borrower will have
sufficient working capital after giving effect to such acquisition to operate
its business and perform the Obligations in accordance with their terms.
If such acquisition is based in whole or in part on subsections 6.12(a)(C) or
-------------------------
(D), then, before such acquisition may be consummated, Required Lenders must
- ---
approve such Projections, which approval shall not unreasonably be withheld.
5.6. Taxes. Cause all assessments and taxes, whether real, personal,
-----
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrower or any of its property to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest. Borrower
shall make due and timely payment or deposit of all such federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Agent, on demand, appropriate certificates attesting to
the payment thereof or deposit with respect thereto. Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower has made
such payments or deposits.
5.7. Insurance. Borrower shall at its expense keep its insurable
---------
properties adequately insured at all times by financially sound and reputable
insurers, maintain such other insurance (including self insurance), to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in
36
connection with the use of any properties owned, occupied or controlled by it;
and maintain such other insurance as may be required by law.
5.8. No Setoffs or Counterclaims. Make payments hereunder and under
---------------------------
the other Loan Documents by or on behalf of Borrower without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, or local taxes.
5.9. Compliance with Laws. Comply with the requirements of all
--------------------
applicable laws, rules, regulations, and orders of any governmental authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
and all orders, judgments, or decrees of any court, in each case, other than
laws, rules, regulations, orders, judgments, or decrees the non-compliance with
which, individually or in the aggregate, would not result in and reasonably
could not be expected to result in a Material Adverse Change.
5.10. Employee Benefits.
-----------------
(a) Cause to be delivered to Agent, each of the following:
(i) promptly, and in any event within 10 Business Days after
Borrower or any of its Subsidiaries knows or has reason to know that
an ERISA Event has occurred that reasonably could be expected to
result in a Material Adverse Change, a written statement of the chief
financial officer of Borrower describing such ERISA Event and any
action that is being taking with respect thereto by Borrower, any such
Subsidiary or ERISA Affiliate, and any action taken or threatened by
the IRS, Department of Labor, or PBGC. Borrower or such Subsidiary, as
applicable, shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor,
(ii) promptly, and in any event within 3 Business Days after
the filing thereof with the IRS, a copy of each funding waiver request
filed with respect to any Benefit Plan and all communications received
by Borrower, any of its Subsidiaries or, to the knowledge of Borrower,
any ERISA Affiliate with respect to such request, and
(iii) promptly, and in any event within 3 Business Days
after receipt by Borrower, any of its Subsidiaries or, to the
knowledge of Borrower, any ERISA Affiliate, of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer
a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to Agent, upon Agent's request, each of the
following:
(i) a copy of each Plan (or, where any such plan is not in
writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments
thereto, all written interpretations thereof and written descriptions
thereof that have been distributed to employees or former employees of
Borrower or its Subsidiaries;
37
(ii) the most recent determination letter issued by the IRS
with respect to each Benefit Plan;
(iii) for the three most recent plan years, annual reports
on Form 5500 Series required to be filed with any governmental agency
for each Benefit Plan;
(iv) all actuarial reports prepared for the last three plan
years for each Benefit Plan;
(v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by
Borrower or any ERISA Affiliate to each such plan and copies of the
collective bargaining agreements requiring such contributions;
(vi) any information that has been provided to Borrower or
any ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan; and
(vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries
under any Retiree Health Plan.
5.11. Leases. Pay when due all rents and other amounts payable under
------
any leases to which Borrower is a party or by which Borrower's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
5.12. Brokerage Commissions. Borrower agrees to indemnify, defend, and
---------------------
hold Agent and the Lender Group harmless from and against any claim of any
broker or finder arising out of Borrower's obtaining financing from the Lender
Group under this Agreement.
5.13. Year 2000 Compliance. Be Year 2000 Compliant by October 1, 1999.
--------------------
5.14. Projections. Not later than 30 days after annual budgets have
-----------
been presented to the board of directors of Borrower, but in any event not later
than the 90th day of the first fiscal year of Borrower to which such Projections
relate, deliver to Agent Projections of Borrower, in form and substance
(including as to scope and underlying assumptions) satisfactory to each Lender
in its discretion, for the forthcoming 3 fiscal years of Borrower, year by year,
and for the forthcoming fiscal year of Borrower, quarter by quarter, certified
by the Clerk of Borrower as being true, correct, and complete and certified by
the chief financial officer of Borrower as being such officer's good faith best
estimate of the financial performance of Borrower during the period covered
thereby.
5.15. Corporate Existence, etc. At all time preserve and keep in full
-------------------------
force and effect Borrower's valid corporate existence and good standing and any
rights and franchises material to Borrower's businesses.
5.16. Disclosure Updates. Promptly and in no event later than 5
------------------
Business Days after obtaining knowledge thereof, (i) notify Agent if any written
information, exhibit, or report
38
furnished to the Lender Group contained any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and (ii)
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment, filing, or recordation thereof.
5.17. Use of Proceeds. Use the proceeds of the Loans for on-going
---------------
liquidity requirements, capital expenditures, interest hereunder and other
general corporate purposes consistent with Borrower's existing line of business
and not including any acquisition of all or a substantial portion of a person or
business.
6. NEGATIVE COVENANTS.
------------------
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
will not do any of the following without the Lender Group's prior written
consent:
6.1. Indebtedness. Create, incur, assume, or permit to exist, directly
------------
or indirectly, any Indebtedness (including Acquired Indebtedness) and Borrower
will not issue any Disqualified Stock. The foregoing limitation will not apply
to:
(a) Indebtedness of Borrower existing under the Credit Facility;
provided that the aggregate principal amount of all such Indebtedness under the
Credit Facility shall not exceed the greater of (A) $75,000,000 at any one time
outstanding and (B) 85% (or such greater percentage permitted pursuant to the
Credit Facility) of the accounts receivable of Borrower net of reserves and
allowances for doubtful accounts, determined in accordance with GAAP;
(b) Indebtedness of Borrower existing under the Cisco Facility;
provided that the aggregate principal amount of all such Indebtedness under the
Cisco Facility shall not exceed $40,000,000 at any one time outstanding;
(c) Existing Indebtedness;
(d) Indebtedness of Borrower owing to any Subsidiary (but only so long
as such Indebtedness is held by such Subsidiary); provided that any Indebtedness
of Borrower owing to any such Subsidiary is subordinated in right of payment
from and after the Maturity Date to the payment and performance of Borrower's
obligations hereunder; and provided further that any transaction pursuant to
which any Subsidiary to which such Indebtedness is owed ceases to be a
Subsidiary will be deemed to be an incurrence of Indebtedness by Borrower that
is not permitted by this clause (d);
(e) Indebtedness of any Subsidiary to Borrower or of any Subsidiary to
another Subsidiary;
(f) Indebtedness of Borrower pursuant to this Agreement;
39
(g) Indebtedness in respect of performance, surety or appeal bonds
provided by Borrower in the ordinary course of business;
(h) Indebtedness under Currency Agreements and Interest Rate
Agreements entered into in the ordinary course of business; provided that such
agreements are designed to protect Borrower against, or manage exposure to,
fluctuations in currency exchange rates and interest rates, respectively, and
that such agreements do not increase the Indebtedness of the obligor outstanding
at any time other than as a result of fluctuations in foreign currency exchange
rates or interest rates or by reason of fees, indemnities and compensation
payable thereunder;
(i) the incurrence by Borrower of Refinancing Indebtedness issued in
exchange for, or the proceeds of which are used to refinance, repurchase,
replace, refund or defease ("Refinance" and correlatively, "Refinanced" and
--------- ----------
"Refinancing") Indebtedness permitted pursuant to clause (c), (f) or (j) of this
- ------------
paragraph; provided that (i) the amount of such Refinancing Indebtedness shall
not exceed the principal amount of, premium, if any, and accrued and unpaid
Interest on the Indebtedness so Refinanced (or if such Indebtedness was issued
with original issue discount, the original issue price plus amortization of the
original issue discount at the time of the repayment of such Indebtedness) plus
the fees, expenses and costs of such Refinancing and reasonable prepayment
premiums, if any, in connection therewith, (ii) such Refinancing Indebtedness
shall have a Stated Maturity no earlier than the earlier of (A) the Stated
Maturity of the Indebtedness being Refinanced and (B) 180 days after the
Maturity Date, (iii) such Refinancing Indebtedness shall have an Average Life
equal to or greater than the longer of (A) the Average Life of the Indebtedness
being Refinanced and (B) the Maturity Date, (iv) if the Indebtedness being
Refinanced is subordinated in right of payment to the Advances, such Refinancing
Indebtedness shall be subordinated in right of payment to the Advances on terms
at least as favorable to the holders of Advances as those contained in the
documentation governing the Indebtedness being so Refinanced, and (v) no
Subsidiary shall incur Refinancing Indebtedness to Refinance Indebtedness of
Borrower;
(j) the incurrence by the Borrower of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase money or similar
obligations, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property, plant
or equipment useful in a Telecommunications Business; and
(k) Indebtedness of Borrower not otherwise permitted to be incurred
pursuant to the foregoing clauses (a) through (j) above, the principal amount
(or original issue price) of which shall not exceed $30,000,00 at any one time
outstanding.
6.2. Liens. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is
40
refinanced under Section 6.1(i) and so long as the replacement Liens only
--------------
encumber those assets or property that secured the original Indebtedness).
6.3. Restrictions on Fundamental Changes.
-----------------------------------
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock with the exception of the Holding
Company Reorganization.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, assign, lease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its property or assets.
6.4. Disposal of Assets. Sell, lease, assign, transfer, or otherwise
------------------
dispose of any of Borrower's properties or assets except for (i) sales of
Inventory to buyers in the ordinary course of Borrower's business as currently
conducted, and (ii) dispositions by Borrower of equipment or other fixed assets,
provided that such equipment or other fixed assets are substantially worn,
damaged or obsolete, replacement equipment or other fixed assets of like kind,
function and value shall be acquired prior to or concurrently with such
disposition, and such replacement equipment or other fixed assets are free and
clear of Liens other than Permitted Liens.
6.5. Amendments to Credit Facility. Enter into any material amendment
-----------------------------
to the Credit Facility.
6.6. Guarantee. Guarantee or otherwise become in any way liable with
---------
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.
6.7. Nature of Business. Make any change in the principal nature of
------------------
Borrower's business. Borrower shall not permit VA Sub to acquire any material
assets other than governmental licenses and permits, nor to engage in active
business operations other than proposed sales operations. The Borrower shall not
form or acquire any other Subsidiary or make any additional investment in VA Sub
after the date hereof, unless the terms and conditions herein shall be amended
prior to such formation, investment or acquisition on terms and conditions
reasonably satisfactory to the Agent, in order to make the terms and conditions
of this Agreement applicable to such Subsidiary.
6.8. [Reserved.]
--------
6.9. Margin Stock. Use or permit the use of any of the proceeds of the
------------
Advances, directly or indirectly, for the purpose of purchasing or carrying, or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry, any Margin Stock (as defined in Regulation U
referred to below) or for any other purpose which
41
might constitute the transactions contemplated hereby a "purpose credit" within
the meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the
Federal Reserve System, or cause any Advance, the application of proceeds
thereof or this Agreement to violate Regulation U, Regulation T or Regulation X
of the Board of Governors of the Federal Reserve System or any other regulation
of such Board or the Securities Exchange Act of 1934, as amended, or any rules
or regulations promulgated under such statutes.
6.10. Distributions. Except for Permitted Distributions, make (or
-------------
permit New Holding Company to make) any distribution or declare or pay (or
permit New Holding Company to declare or pay) any dividends (in cash or other
property, other than Stock) on, or purchase, acquire, redeem, or retire any of
Borrower's Stock (or permit New Holding Company to purchase, acquire, redeem, or
retire any of New Holding Company's Stock), of any class, whether now or
hereafter outstanding.
6.11. Accounting Methods. Modify or change its method of accounting or
------------------
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Agent information
regarding Borrower's financial condition. Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agrees that Agent may contact directly
any such accounting firm or service bureau in order to obtain such information.
6.12. Investments.
-----------
(a) Directly or indirectly make, acquire, or incur any
liabilities (including contingent obligations), which, in the aggregate, exceed
the sum of (A) $5,000,000, plus (B) $10,000,000 of Stock of Borrower or New
Holding Company (but not cash or other property other than Stock of Borrower or
New Holding Company), plus (C) 85% of the amount of New Capital Proceeds
actually contributed by New Holding Company to Borrower after the Closing Date,
plus (D) Old Bell Atlantic Collections in excess of $10,000,000 (if any), for or
in connection with (i) the acquisition of the securities (whether debt or
equity) of, or other interests in, a Person, (ii) loans, advances, capital
contributions, or transfers of property to a Person, in connection with any
acquisition permitted by clause (i) or clause (iii) of this paragraph, or (iii)
the acquisition of all or substantially all of the properties or assets of a
Person; provided that, in the case of any acquisition of any Subsidiary,
Borrower shall cause to be provided to the Lender Group, a guaranty from such
Subsidiary of the Obligations, in each case in form and substance satisfactory
to Agent.
(b) Permit New Holding Company directly or indirectly to make,
acquire, or incur any liabilities (including contingent obligations) for or in
connection with (i) the acquisition of the securities (whether debt or equity)
of, or other interests in, a Person, (ii) loans, advances, capital
contributions, or transfers of property to a Person, or (iii) the acquisition of
all or substantially all of the properties or assets of a Person.
42
(c) Prior to making any acquisition governed by this
Section 6.12, Borrower shall comply with the provisions of Section 2.10 and
- ------------ ------------
Section 3.2(d).
- --------------
6.13. Transactions with Affiliates. Directly or indirectly enter into
----------------------------
or permit to exist any material transaction with any Affiliate of Borrower
except for (a) transactions set forth on Schedule 6.13, or (b) transactions that
are in the ordinary course of Borrower's business, upon fair and reasonable
terms, that are fully disclosed to Agent, and that are no less favorable to
Borrower than would be obtained in an arm's length transaction with a
non-Affiliate.
6.14. Suspension. Suspend or go out of a substantial portion of its
----------
business.
6.15. No Prohibited Transactions Under ERISA. Directly or indirectly:
--------------------------------------
(a) engage, or permit any Subsidiary of Borrower to engage, in
any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to terminate,
any Benefit Plan where such event would result in any liability of Borrower, any
of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to fail, to make
any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to fail, to pay
any required installment or any other payment required under Section 412 of the
IRC on or before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower to amend, a Plan
resulting in an increase in current liability for the plan year such that either
of Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA; which, individually
or in the aggregate, results in or
43
reasonably would be expected to result in a claim against or liability of
Borrower, any of its Subsidiaries or any ERISA Affiliate in excess of $10,000.
6.16. Violation of Material Agreements. Breach any material
--------------------------------
contractual obligation (including, but not limited to, the Bell Atlantic
Agreements).
7. EVENTS OF DEFAULT.
-----------------
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
----------------
7.1. If Borrower fails to pay when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
7.2. (a) If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in any negative
covenant set forth in Article 6 of this Agreement, contained in any negative
---------
covenant set forth in any other Loan Document, or contained in Section 5.10 of
------------
this Agreement; or
(b) If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and the Lender Group, other than those covered by
clause (a) of this Section 7.2, and such failure or neglect, in each case, is
-----------
not cured to the Lender Group's reasonable satisfaction within 15 Business Days
after the sooner to occur of Borrower's receipt of notice of such failure or
neglect from Agent or the date on which such failure or neglect first becomes
actually known to any of the chairman of the board, chief executive officer,
president, treasurer, chief financial officer, or corporate controller of
Borrower; provided that if any failure or neglect referred to in this paragraph
is the subject of another provision of this Section 7, in such event such other
---------
provision of this Section 7 shall govern;
---------
7.3. If properties or assets of Borrower with an aggregate value
(based on greater of cost or market) in excess of $2,000,000 are attached,
seized, subjected to a writ or distress warrant, or is levied upon, or come into
the possession of any third Person;
7.4. If an Insolvency Proceeding is commenced by Borrower;
7.5. If an Insolvency Proceeding is commenced against Borrower and any
of the following events occur:
(a) Borrower consents to the institution of the Insolvency
Proceeding against it;
44
(b) the petition commencing the Insolvency Proceeding is not
timely controverted;
(c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent), and each member of the Lender Group shall be relieved of its
obligation to extend credit hereunder;
(d) an interim trustee is appointed to take possession of all or
a substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, Borrower; or
(e) an order for relief shall have been issued or entered
therein;
7.6. If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
7.7. If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts in an
aggregate amount exceeding $2,000,000 owing at any time hereafter to any one or
more of such entities becomes a Lien, whether choate or otherwise, upon any of
Borrower's properties or assets and the same is not paid on the payment date
thereof;
7.8. If any judgments or other claims in an aggregate amount exceeding
$2,000,000 become a Lien or encumbrance upon any of Borrower's properties or
assets;
7.9. If there is a default in any material agreement to which Borrower
is a party with one or more third Persons and (a) the aggregate amount of
Borrower's obligations under all such material agreements in which there is a
default exceeds $2,000,000, and (b) such default (i) occurs at the final
maturity of the obligations thereunder, or (ii) results in a right by such third
Person(s), irrespective of whether exercised, to accelerate the maturity of
Borrower's obligations thereunder to terminate such agreement, or to refuse to
renew such agreement pursuant to an automatic renewal right therein;
7.10. If Borrower makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
7.11. If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by Borrower or any officer, employee, agent, or director of
Borrower, or if any such warranty or representation is withdrawn;
45
7.12. If the obligation of any guarantor under its guaranty or other
third Person under any Loan Document is limited or terminated by operation of
law or by the guarantor or other third Person thereunder, or any such guarantor
or other third Person becomes the subject of an Insolvency Proceeding;
7.13. If a Change of Control occurs; or
7.14. If the Borrower fails to execute and deliver Class B Contingent
Warrants to Agent pursuant to Section 3.2(f).
--------------
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
--------------------------------------
8.1. Rights and Remedies. Upon the occurrence, and during the
-------------------
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may, except to the
extent otherwise expressly provided or required below, authorize and instruct
Agent to do any one or more of the following on behalf of the Lender Group (and
Agent, acting upon the instructions of the Required Lenders, shall do the same
on behalf of the Lender Group), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the other Loan Documents
or under any other agreement between Borrower and the Lender Group;
(c) Terminate the Commitments; and/or
(d) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents.
8.2. Remedies Cumulative. The rights and remedies of Agent, on behalf
-------------------
of the Lender Group, under this Agreement, the other Loan Documents, and all
other agreements shall be cumulative. The Lender Group shall have all other
rights and remedies not inconsistent herewith as provided by law, or in equity.
No exercise by Agent, on behalf of the Lender Group, of one right or remedy
shall be deemed an election, and no waiver by the Required Lenders or the Lender
Group of any Event of Default shall be deemed a continuing waiver. No delay by
Agent or the Lender Group shall constitute a waiver, election, or acquiescence
by it.
9. TAXES AND EXPENSES.
------------------
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that
46
Agent determines that such failure by Borrower could result in a Material
Adverse Change, in its discretion and without prior notice to Borrower, Agent
may do any or all of the following:
(a) make payment of the same or any part thereof; or
(b) set up such reserves in Borrower's Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure.
Any such amounts paid by Agent shall constitute Lender Group Expenses. Any such
payments made by Agent shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
10. WAIVERS; INDEMNIFICATION.
------------------------
10.1. Demand; Protest; etc. Borrower waives demand, protest, notice of
---------------------
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable.
10.2. Indemnification. Borrower shall pay, indemnify, defend, and hold
---------------
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
counsel, agents, and attorneys-in-fact (each, an "Indemnified Person")
------------------
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or related
to the execution, delivery, enforcement, performance, and administration of this
Agreement and any other Loan Documents or the transactions contemplated herein,
and with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities").
-----------------------
Borrower shall have no obligation to any Indemnified Person under this
Section 10.2 with respect to any Indemnified Liability that a court of competent
- ------------
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to which Borrower was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrower with respect thereto.
47
11. NOTICES.
-------
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, or telefacsimile to the relevant party,
as the case may be, at its address set forth below:
If to Borrower:
CTC COMMUNICATIONS CORP.
360 Second Avenue
Waltham, Massachusetts 02451
Attn.: Mr. Steven Jones
Fax No. 781-890-1613
with copies to:
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
Attn.: David A. McKay, Esq., and Mary E. Weber, Esq.
Fax No. 617-951-7050
and to:
Leonard Glass, Esq.
45 Central Avenue
Tenafly, New Jersey 07670
Fax No. 201-894-1718
If to TDSI or Arrangement, Structuring & Syndication Agent:
TD SECURITIES (USA) INC.
31 West 52nd Street
New York, New York 10019-6101
Attn.: Mr. Thomas Regan
Fax No. 212-581-5795
48
with copies to:
LATHAM & WATKINS
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Attn.: John D. Watson, Jr., Esq.
Fax No. (202) 637-2200
If to TD Texas or Agent:
TORONTO DOMINION (TEXAS), INC.
909 Fannin Street
Houston, Texas 77010
Attn.: Mr. Walter Finley
Fax No. (713) 951-9921
with copies to:
LATHAM & WATKINS
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004-2505
Attn.: John D. Watson, Jr., Esq.
Fax No. (202) 637-2200
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to all other
parties. All notices or demands sent in accordance with this Section 11, shall
----------
be deemed received on the earlier of the date of actual receipt or 3 days after
the deposit thereof in the mail.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
------------------------------------------
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK. BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
49
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. DESTRUCTION OF BORROWER'S DOCUMENTS.
-----------------------------------
All documents, schedules, agings, or other papers delivered to any one
or more members of the Lender Group may be destroyed or otherwise disposed of by
such member of the Lender Group four months after they are delivered to or
received by such member of the Lender Group, unless Borrower requests, in
writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
------------------------------------------
14.1 Assignments and Participations.
------------------------------
(a) Any Lender may, with the written consent of Agent, assign and
delegate to one or more assignees (provided that no written consent of Agent
shall be required in connection with any assignment and delegation by a Lender
to an Eligible Transferee) (each an "Assignee") all, or any ratable part of all,
--------
of the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until
(i) written notice of such assignment, together
with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to Borrower and
Agent by such Lender and the Assignee;
(ii) such Lender and its Assignee shall have
delivered to Borrower and Agent an Assignment and Acceptance; and
(iii) the assignor Lender or Assignee has paid to
Agent for Agent's sole and separate account a processing fee in
the amount of $3,500. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is
in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the
business or loan portfolio of such Lender.
50
(b) From and after the date that Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee,
(i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights (except with respect to
Section 10.2 hereof) and be released from its obligations under
------------
this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation between
Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto; (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (5)
such Assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
51
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
-----------
in the Obligations, the Commitment, and the other rights and interests of that
Lender (the "originating Lender") hereunder and under the other Loan Documents
------------------
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that
(i) the originating Lender's obligations under
this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely
responsible for the performance of such obligations,
(iii) Borrower and Agent shall continue to deal
solely and directly with the originating Lender in connection
with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents,
(iv) no Lender shall transfer or grant any
participating interest under which the Participant has the sole
and exclusive right to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the
Obligations hereunder in which such Participant is participating;
(B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating; (C) release
all or a material portion of the guaranties (except to the extent
expressly provided herein or in any of the Loan Documents)
supporting the Obligations hereunder in which such Participant is
participating; (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through such
Lender; or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums; and
(v) all amounts payable by Borrower hereunder
shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement. The rights of any Participant only shall be
derivative through the originating Lender with whom such
Participant participates and no Participant shall have any direct
rights as to the other Lenders, Agent, Borrower, the Collections
or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions
by the Lenders among themselves.
52
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR Sec. 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2. Successors. This Agreement shall bind and inure to the benefit
----------
of the respective successors and assigns of each of the parties; provided,
however, that Borrower may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release Borrower from its Obligations. A Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 14.1 hereof and, except as expressly required
------------
pursuant to Section 14.1 hereof, no consent or approval by Borrower is required
------------
in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
-------------------
15.1. Amendments and Waivers. No amendment or waiver of any provision
----------------------
of this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders and Borrower and
acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments that is required for
the Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
53
(f) change the definition of "Required Lenders";
----------------
(g) release Borrower from any Obligation for the payment of
money, or consent to any assignment or transfer by Borrower of any Obligation;
(h) amend any of the provisions of Section 15 or 16; or
----------------
(i) release any guarantor from its obligations under a guaranty;
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrower, shall not require consent
by or the agreement of Borrower.
15.2. No Waivers; Cumulative Remedies. No failure by Agent or any
-------------------------------
Lender to exercise any right, remedy, or option under this Agreement, any other
Loan Document, or any present or future supplement hereto or thereto, or in any
other agreement between or among Borrower and Agent or any Lender, or delay by
Agent or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by Agent or any Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Agent or the Lenders
on any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrower of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
which Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
-----------------------
16.1. Appointment and Authorization of Agent. Each Lender hereby
--------------------------------------
designates and appoints TDSI as Arrangement, Structuring & Syndication Agent and
TD Texas as Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent and to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Each Lender authorizes and directs
Agent to enter into the Cisco Subordination Agreement on its behalf and agrees
to be bound by the terms of the Cisco Subordination Agreement with the same
force and effect as if such Lender were a party thereto. Agent and Arrangement,
Structuring & Syndication Agent agree to act as such on the express conditions
contained in this Section 16. The provisions of this Section 16 are solely for
---------- ----------
the benefit of Agent, Arrangement, Structuring & Syndication Agent, and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein; provided, however, that certain of the
provisions of Section 16.10 hereof also shall be for the benefit of Borrower.
-------------
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, neither Agent nor Arrangement, Structuring
&
54
Syndication Agent shall have any duties or responsibilities, except those
expressly set forth herein, nor shall Agent nor Arrangement, Structuring &
Syndication Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent or Arrangement, Structuring &
Syndication Agent; it being expressly understood and agreed that the use of the
words "Agent" and "Arrangement, Structuring & Syndication Agent" is for
convenience only, that TD Texas and TDSI are merely the representatives of the
Lenders, and have only the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent and Arrangement,
Structuring & Syndication Agent shall have and may use their sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions which Agent or
Arrangement, Structuring & Syndication Agent, as applicable, is expressly
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect:
(a) maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Advances, and
related matters;
(b) execute or file any and all financing or similar statements
or notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents;
(c) make Advances, for itself or on behalf of Lenders as provided
in the Loan Documents;
(d) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower, the Obligations, or
otherwise related to any of same as provided in the Loan Documents; and
(e) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2. Delegation of Duties. Except as otherwise provided in this
--------------------
section, Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made in
compliance with this section and without gross negligence or willful misconduct.
16.3. Liability of Agent. None of Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the
55
Lenders for any recital, statement, representation or warranty made by Borrower
or any Subsidiary or Affiliate of Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of Borrower
or any of Borrower's Subsidiaries or Affiliates. The foregoing notwithstanding,
nothing in this section is intended to create a standard of care or impose
liability on any Agent-Related Person that would not otherwise exist but for
this section.
16.4. Reliance by Agent. Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5. Notice of Default or Event of Default. Agent shall not be deemed
-------------------------------------
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 16.4, Agent shall take
------------
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 8; provided, however, that
---------
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
56
16.6. Credit Decision. Each Lender acknowledges that none of
---------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of
Agent-Related Persons.
16.7. Costs and Expenses; Indemnification. Agent may incur and pay
-----------------------------------
Lender Group Expenses to the extent Agent deems reasonably necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and auctioneer
fees, whether or not Borrower is obligated to reimburse Agent or Lenders for
such expenses pursuant to the Loan Agreement or otherwise. Agent is authorized
and directed to deduct and retain sufficient amounts from Collections to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses from Collections, each Lender hereby agrees that it is
and shall be obligated to pay to or reimburse Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand Agent-Related
Persons (to the extent not reimbursed by or on behalf of Borrower and without
limiting the obligation of Borrower to do so), according to their Pro Rata
Shares, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this
57
Agreement, any other Loan Document, or any document contemplated by or referred
to herein, to the extent that Agent is not reimbursed for such expenses by or on
behalf of Borrower. The undertaking in this section shall survive the payment of
all Obligations hereunder and the resignation or replacement of Agent.
16.8. Agent in Individual Capacity. TDSI, TD Texas, and their
----------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though TDSI and TD Texas were not agents
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, TDSI, TD Texas, or their
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person (other than the Lender Group) party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrower or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver Agent will use its reasonable
best efforts to obtain), Agent shall be under no obligation to provide such
information to them. The terms "Lender" and "Lenders" include TD Texas in
------ -------
its individual capacity.
16.9. Successor Agent. Agent may resign as Agent upon 45 days notice
---------------
to the Lenders. If Agent resigns under this Agreement, the Required Lenders
shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
-----
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
----------
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10. Withholding Tax.
----------------
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
58
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of
any interest in the first calendar year and before the payment of
any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed
copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the IRC or other laws of the United States as a condition
to exemption from, or reduction of, United States withholding
tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrower to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form 1001 as no longer
valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify Agent fully for all amounts paid, directly
or indirectly, by
59
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to Agent under this
Section, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of Agent.
16.11. Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any accounts of Borrower now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to
be taken any action, including, the commencement of any legal or equitable
proceedings.
(b) Subject to Section 15.8, if, at any time or times any Lender
------------
shall receive (i) by payment, foreclosure, setoff or otherwise, or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.12. Payments by Agent to the Lenders. All payments to be made by
--------------------------------
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium or interest on revolving advances or
otherwise.
16.13. Several Obligations; No Liability. Notwithstanding that certain
---------------------------------
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective
60
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 17.7, no member of the Lender Group shall
------------
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
17. GENERAL PROVISIONS.
------------------
17.1. Effectiveness. This Agreement shall be binding and deemed
-------------
effective when executed by Borrower and each member of the Lender Group whose
signature is provided for on the signature pages hereof.
17.2. Section Headings. Headings and numbers have been set forth
----------------
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
17.3. Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against the Lender Group or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
17.4. Severability of Provisions. Each provision of this Agreement
--------------------------
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5. Amendments in Writing. This Agreement can only be amended by a
---------------------
writing signed by Agent, the Required Lenders, and Borrower.
17.6. Counterparts; Telefacsimile Execution. This Agreement may be
-------------------------------------
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
61
17.7. Revival and Reinstatement of Obligations. If the incurrence or
----------------------------------------
payment of the Obligations by Borrower or any guarantor of the Obligations or
the transfer by either or both of such parties to the Lender Group of any
property of either or both of such parties should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
-----------------
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8. Integration. This Agreement, together with the other Loan
-----------
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
CTC COMMUNICATIONS CORP., a Massachusetts
corporation
By:
-----------------------------------------
Title:
-----------------------------------------
TORONTO DOMINION (TEXAS), INC., a Delaware
corporation, as Agent, and as a Lender
By:
-----------------------------------------
Title:
-----------------------------------------
TD SECURITIES (USA) INC., a Delaware corporation,
as Arrangement, Structuring & Syndication Agent
By:
-----------------------------------------
Title:
-----------------------------------------
63